Monthly M&A Insider - Mergermarket

Nordic
Post Danmark/Posten merger could see
EC competition issues
• The merger between Post Danmark and Posten, the
Danish and Swedish mail services companies, is being
investigated by the European Commission (EC) in a Phase
I investigation, which has been extended to 21 April after
the companies offered remedies to address EC concerns
about anti-competitive effects.
• Three areas of major concern were identified by the
experts and the competitor. They are parcel delivery, mail
preparation, and mail delivery. Posten is active in the
Danish parcel delivery market through its DPD franchise.
A merger between the two can consequently result in a
higher market share for the merged entity in Denmark,
resulting in speculation the business may have to be
divested to solve the regulatory concerns. The EC could
be concerned that the combined group would have
an incentive to restrict access to their parcel delivery
infrastructure, so that competitors cannot offer the
service effectively.
• In 2010 Post Danmark’s monopoly for mail weighing
more than 50g runs out, in theory opening the market
for competition. However, this market segment is
reported to have extremely high barriers to entry for
new competitors. Both companies still enjoy strong
near-monopoly positions in their respective mail delivery
home markets. Posten has no competition in individual
mail delivery, and in industrial mail it has dominated the
Swedish market with around an 80% market share,
although the market was been liberalised in 1993. Posten
owns the Stralfors business which is engaged in the
printing and enveloping of primarily administrative mail
in Sweden and Denmark. Bundling these preparation
services with delivery services, or excluding competitors
in delivery services from using the preparation facilities
of Post Danmark/Posten could therefore potentially
threaten competition. If this occurs other mail preparation
companies could be forced out of the market. Posten and
Post Danmark could offer behavioral commitments, like
granting access to Stralfors for competitors. However,
the EC is likely to prefer structural remedies, such as
divestments, over behavioral.
• The competitor source suggested that implementing a
custody would guarantee that no bundling would occur.
Overall, one cannot rule out a Phase I clearance as
the companies appeared to have had extensive prenotification
talks with the EC. However, there is still
widespread expectation that the deal will go to an indepth
Phase II investigation, giving Brussels an additional
90 working days to look at the case.
Rieber & Son would consider approaches for
King Oscar on the back of demerger; Graal
would take a look if on the market
• Rieber & Son, the listed Norwegian food group, would
consider approaches to its King Oscar subsidiary. The
company has flagged up a demerger of the canned
seafood subsidiary.
• A company statement said the Rieber & Son board
believes there is an “ongoing process of reorganisation
and restructuring at production level within the canned
seafood industry”. It went on to state that “separation
would allow King Oscar to take part in a possible
restructuring process”. King Oscar could be sold as a
result of the demerger; however the company is not
in discussions with any potential bidder to this end.
King Oscar is likely earmarked for the demerger due to
its small size, an industry, and is a likely a divestment
candidate in the group’s attempt to streamline the
business. Polish Graal, which bought Orkla’s Superfish
in 2007, could be a potential buyer. Its main markets are
the USA, Norway, Australia and Poland. Rieber & Son will
continue to focus on its core activities to achieve top-line
growth, but is not planning non-core disposals.
Monthly M&A Report – 170